Sprint CEO says AT&T takeover would stifle innovation

Matt Hamblen |
March 22, 2011

Deal will hurt consumers, Hesse says, by putting too many subscribers under AT&T and Verizon

FRAMINGHAM, 22 MARCH 2011 - Sprint CEO Dan Hesse said Tuesday that the proposed $39 billion AT&T takeover of T-Mobile USA would "stifle innovation and put too much power in the hands of just two carriers."

Hesse referred to putting too much power into the hands of the combined AT&T and T-Mobile and Verizon Wireless. Sprint has about 50 million subscribers, and Verizon has 93 million. AT&T and T-Mobile combined would have about 130 million subscribers.

Hesse made his remarks while on a panel with top executives at other large wireless carriers at the CTIA Wireless conference here. He was seated alongside Ralph de la Vega, CEO of AT&T Mobility, and Dan Mead, the CEO of Verizon Wireless.

Panel moderator Jim Cramer, a CNBC host, asked all three whether a recent New York Times article was correct in saying the the AT&T takeover will hurt consumers. Hesse agreed that would be the case, while De la Vega and Mead disagreed.

Mead called the article "an overstatement" and said Verizon is focused on its own network advancement with its LTE deployment. "We have a tremendous amount of competition in the industry ... I'm not concerned about [the merger] ... We'll be watching what goes on [but] we aren't going to get distracted."

Sprint had already denounced the merger deal, announced Sunday, and Hesse expanded on that view. He said Verizon and a combined AT&T with T-Mobile would control 79% of postpaid subscribers, compared with today, where AT&T and Verizon share 67% of those subscribers. Together, the proposed AT&T entity and Verizon would control 74% of wireless service revenues, Hesse said.

Hesse also joked when Cramer asked about the men having to sit together. "We can still shake hands," Hesse said. Cramer also noted that when the surprise announcement of the takeover came out, "it ruined everybody's Sunday." Hesse responded it had, "a little bit," which won applause from the thousands gathered to listen.

Later, when Cramer complained to de la Vega that his devices will suddenly freeze in the middle of an important basketball game, de la Vega started to give an explanation about network traffic management, but Hesse interrupted and told Cramer, "You should be asking Verizon that" since Cramer said he was a Verizon customer.

The remark showed Hesse was still able to joke despite the takeover news, which caused Sprint's stock to crash by 13% on Monday.